Lockheed and Boeing hope to be cheaper as a team

They have long been bitter rivals for rocket deals. A 20-month Pentagon ban on Boeing for industrial espionage against Lockheed was lifted in March.

As part of the deal, they will seek the dismissal of a related court case.

They said United Launch Alliance will be 50% owned by each firm, and could save the government up to $150m a year.

Peace pact

In July 2003, the Pentagon stripped Boeing of $1bn of rocket-related business and barred it from future bids after it was found to have obtained 25,000 Lockheed documents about deals the two firms were competing for.

This new deal stipulates that the two will immediately ask for a court order suspending the outstanding civil lawsuit linked to the Pentagon espionage charge.

They have also pledged to dismiss all claims against each other when the joint venture is finalised, which is expected to be in late 2005.

"The mission of this joint venture is to reliably meet critical launch needs so it is imperative that the two teams come together as one with all lingering issues resolved," said Lockheed Martin President Robert Stevens.

Two technologies

The new firm, UAL, will be based in Denver and employ 3,800 staff at sites in five US states - Colorado, Alabama, California, Florida and Texas.

Under the deal, Boeing's Delta rockets and Lockheed's Atlas rocket technologies will both continue to exist but will cease to compete for government contracts.

The USAF and government agencies like Nasa will therefore still have the same range of technological choices.

"By joining together we are convinced that we can provide the customers with assured access to space at the lowest possible cost," said Boeing chief executive James Bell.

Civilian rivalry

One factor driving the two rivals together is thought to be the weak market for civilian work, making cost savings elsewhere more important.

Civilian satellite launch contracts are not included in the pact, and the two firms will continue to compete against each other for non-government work.

Nor does the joint venture include work on Nasa's space shuttle programme where Boeing and Lockheed have different co-operative arrangements.

The joint venture will need the approval of anti-trust regulators. However, it is believed to have the backing of military officials.